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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                      

Commission File Number 001-36177

GlycoMimetics, Inc.

(Exact name of registrant as specified in its charter)

Delaware

06-1686563

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

9708 Medical Center Drive

Rockville, Maryland

20850

(Address of principal executive offices)

(Zip Code)

(240243-1201

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

GLYC

The Nasdaq Stock Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer            Accelerated Filer Smaller Reporting Company

Non-accelerated Filer        Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes      No  

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of the close of business on November 1, 2023 was 64,393,294.

GLYCOMIMETICS, INC.

INDEX TO FORM 10-Q

PAGE

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

3

Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022

3

Unaudited Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022

4

Unaudited Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022

5

Unaudited Statements of Cash Flows for the nine months ended September 30, 2023 and 2022

6

Notes to Unaudited Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3. Quantitative and Qualitative Disclosures about Market Risk

27

Item 4. Controls and Procedures

28

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

28

Item 1A. Risk Factors

28

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

28

Item 5. Other Information

29

Item 6. Exhibits

29

Signatures

30

Table of Contents

Part I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GLYCOMIMETICS, INC.

Balance Sheets

September 30, 

December 31, 

 

2023

2022

 

Assets

    

(Unaudited)

    

Current assets:

Cash and cash equivalents

$

49,407,629

$

47,870,619

Prepaid expenses and other current assets

 

2,602,446

 

2,844,086

Total current assets

 

52,010,075

 

50,714,705

Property and equipment, net

 

132,979

 

242,390

Prepaid research and development expenses

 

50,000

 

50,000

Deposits

52,320

52,320

Operating lease right-of-use asset

955,310

751,174

Total assets

$

53,200,684

$

51,810,589

Liabilities & stockholders’ equity

Current liabilities:

Accounts payable

$

329,885

$

970,191

Accrued expenses

 

5,311,377

 

6,992,006

Lease liabilities

 

749,618

 

918,555

Total current liabilities

 

6,390,880

 

8,880,752

Lease liabilities, net of current portion

262,133

Total liabilities

 

6,653,013

 

8,880,752

Stockholders’ equity:

Preferred stock; $0.001 par value; 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022

 

 

Common stock; $0.001 par value; 100,000,000 shares authorized; 64,368,843 shares issued and outstanding at September 30, 2023; 54,377,798 shares issued and outstanding at December 31, 2022

 

64,369

 

54,378

Additional paid-in capital

 

493,889,874

 

462,461,251

Accumulated deficit

 

(447,406,572)

 

(419,585,792)

Total stockholders’ equity

 

46,547,671

 

42,929,837

Total liabilities and stockholders’ equity

$

53,200,684

$

51,810,589

The accompanying notes are an integral part of the unaudited financial statements.

3

Table of Contents

 

GLYCOMIMETICS, INC.

Unaudited Statements of Operations and Comprehensive Loss

Three Months Ended September 30, 

Nine Months Ended September 30, 

2023

2022

2023

2022

Revenue from collaboration and license agreements

$

$

$

$

75,000

Costs and expenses:

Research and development expense

5,291,790

4,922,857

 

14,783,204

 

22,500,058

General and administrative expense

 

4,521,706

 

3,844,579

 

14,901,255

 

14,355,644

Total costs and expenses

 

9,813,496

 

8,767,436

 

29,684,459

 

36,855,702

Loss from operations

 

(9,813,496)

 

(8,767,436)

 

(29,684,459)

 

(36,780,702)

Interest income

 

610,978

 

243,597

 

1,863,679

 

336,255

Net loss and comprehensive loss

$

(9,202,518)

$

(8,523,839)

$

(27,820,780)

$

(36,444,447)

Basic and diluted net loss per common share

$

(0.14)

$

(0.16)

$

(0.44)

$

(0.70)

Basic and diluted weighted-average number of common shares outstanding

 

64,349,709

 

52,423,944

 

62,992,006

 

52,387,561

The accompanying notes are an integral part of the unaudited financial statements.

4

Table of Contents

GLYCOMIMETICS, INC.

Unaudited Statements of Stockholders’ Equity

Additional

Total

Common Stock

Paid-In

Accumulated

Stockholders’

Shares  

Amount  

Capital

Deficit

Equity

Balance at December 31, 2022

 

54,377,798

$

54,378

$

462,461,251

$

(419,585,792)

$

42,929,837

Issuance of common stock, net of issuance costs

9,822,930

9,823

28,697,188

28,707,011

Common stock issued under stock plans

 

44,496

 

44

 

33,724

 

 

33,768

Stock-based compensation

 

 

 

870,180

 

 

870,180

Net loss

 

 

 

 

(10,359,350)

 

(10,359,350)

Balance at March 31, 2023

 

64,245,224

64,245

492,062,343

(429,945,142)

62,181,446

Common stock issued under stock plans

 

68,109

 

68

 

20,046

 

 

20,114

Stock-based compensation

 

 

 

858,088

 

 

858,088

Net loss

 

 

 

 

(8,258,912)

 

(8,258,912)

Balance at June 30, 2023

 

64,313,333

64,313

492,940,477

(438,204,054)

54,800,736

Common stock issued under stock plans

 

55,510

 

56

 

61,560

 

 

61,616

Stock-based compensation

 

 

 

887,837

 

 

887,837

Net loss

 

 

 

 

(9,202,518)

 

(9,202,518)

Balance at September 30, 2023

 

64,368,843

$

64,369

$

493,889,874

$

(447,406,572)

$

46,547,671

Additional

Total

Common Stock

Paid-In

Accumulated

Stockholders’

Shares  

Amount  

Capital

Deficit

Equity

Balance at December 31, 2021

 

52,313,894

$

52,314

$

454,448,327

$

(372,896,990)

$

81,603,651

Common stock issued under stock plans

78,550

 

78

 

(78)

 

 

Stock-based compensation

 

 

 

1,080,642

 

 

1,080,642

Net loss

 

 

 

 

(14,653,041)

 

(14,653,041)

Balance at March 31, 2022

 

52,392,444

52,392

455,528,891

(387,550,031)

68,031,252

Common stock issued under stock plans

 

31,500

 

32

 

(32)

 

 

Stock-based compensation

 

 

 

963,758

 

 

963,758

Net loss

 

 

 

 

(13,267,567)

 

(13,267,567)

Balance at June 30, 2022

 

52,423,944

52,424

456,492,617

(400,817,598)

55,727,443

Stock-based compensation

 

 

 

913,979

 

 

913,979

Net loss

 

 

 

 

(8,523,839)

 

(8,523,839)

Balance at September 30, 2022

 

52,423,944

$

52,424

$

457,406,596

$

(409,341,437)

$

48,117,583

The accompanying notes are an integral part of the unaudited financial statements.

5

Table of Contents

GLYCOMIMETICS, INC.

Unaudited Statements of Cash Flows

Nine Months Ended September 30, 

    

2023

    

2022

Operating activities

Net loss

$

(27,820,780)

$

(36,444,447)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

 

130,004

 

161,427

Loss on disposal of assets

3,498

Non-cash lease expense

668,756

611,163

Stock-based compensation

 

2,616,105

 

2,958,379

Changes in assets and liabilities:

Prepaid expenses and other current assets

 

241,640

 

(1,689,613)

Prepaid research and development expenses

752,807

Accounts payable

 

(640,306)

 

(1,255,490)

Accrued expenses

 

(1,680,629)

 

(2,903,733)

Lease liabilities

(779,696)

(739,910)

Net cash used in operating activities

 

(27,264,906)

 

(38,545,919)

Investing activities

Purchases of property and equipment

 

(20,593)

 

(84,190)

Net cash used in investing activities

 

(20,593)

 

(84,190)

Financing activities

Proceeds from issuance of common stock, net of issuance costs

 

28,707,011

 

Proceeds from exercise of stock options

 

115,498

 

Net cash provided by financing activities

 

28,822,509

 

Net change in cash and cash equivalents

 

1,537,010

 

(38,630,109)

Cash and cash equivalents, beginning of period

 

47,870,619

 

90,254,890

Cash and cash equivalents, end of period

$

49,407,629

$

51,624,781

The accompanying notes are an integral part of the unaudited financial statements.

6

Table of Contents

GLYCOMIMETICS, INC.

Notes to Unaudited Financial Statements

1. Description of the Business

GlycoMimetics, Inc. (the Company), a Delaware corporation headquartered in Rockville, Maryland, was incorporated in 2003. The Company is a late-stage clinical development biotechnology company focused on improving the lives of people living with cancer and inflammatory diseases by leveraging the inhibition of carbohydrate interactions that occur on the surface of cells. The Company is developing a pipeline of proprietary glycomimetics, which are small molecules that mimic the structure of carbohydrates involved in important biological processes, to inhibit disease-related functions of carbohydrates such as the roles they play in inflammation, cancer and infection.

The Company’s executive personnel have devoted substantially all of their time to date to the planning and organization of the Company, the process of hiring scientists, initiating research and development programs and securing adequate capital for anticipated growth and operations. The Company has not commercialized any of its drug candidates and planned commercial operations have not commenced. The Company has incurred significant losses in the development of its drug candidates. The Company has not generated revenues from product sales. As a result, the Company has consistently reported negative cash flows from operating activities and net losses, had an accumulated deficit of $447.4 million at September 30, 2023 and expects to continue incurring losses for the foreseeable future.

The Company believes that its cash and cash equivalents as of September 30, 2023 will be sufficient to fund the Company’s operations for at least 12 months from the issuance of these financial statements. Management intends to fund future operations through additional public or private equity or debt offerings and may seek additional capital through arrangements with strategic partners or from other sources, the securing of which cannot be assured.

2. Significant Accounting Policies

There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the United States Securities and Exchange Commission (the SEC) on March 29, 2023 (the Form 10-K).

Basis of Accounting

The accompanying unaudited financial statements were prepared based on the accrual method of accounting in accordance with U.S. generally accepted accounting principles (GAAP).

Unaudited Financial Statements

The accompanying balance sheet as of September 30, 2023, statements of operations and comprehensive loss and stockholders’ equity for the three and nine months ended September 30, 2023 and 2022 and statements of cash flows for the nine months ended September 30, 2023 and 2022 are unaudited. These unaudited financial statements have been prepared in accordance with the rules and regulations of the SEC for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. These unaudited financial statements should be read in conjunction with the audited financial statements and the accompanying notes for the year ended December 31, 2022 contained in the Form 10-K. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management reflect all adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company’s financial position as of September 30, 2023 and its results of operations and changes in its stockholders’ equity for the three and nine months ended September 30, 2023 and 2022 and its cash flows for the nine months ended September 30, 2023 and 2022. The December 31, 2022 balance sheet included herein was derived from audited financial statements, but does not include all disclosures including notes required by GAAP for complete annual financial statements. The financial data and other information disclosed in these notes to the financial statements related to the three and nine months ended September 30, 2023 and 2022 are unaudited. Interim results are not necessarily indicative of results for an entire year or for any future period.

7

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Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Although actual results could differ from those estimates, management does not believe that such differences would be material.

Fair Value Measurements

The Company had no assets or liabilities that were measured using quoted prices for similar assets and liabilities or significant unobservable inputs (Level 2 and Level 3 assets and liabilities, respectively) as of September 30, 2023 and December 31, 2022. The carrying value of cash held in money market funds of $44.0 million and $45.9 million as of September 30, 2023 and December 31, 2022, respectively, is included in cash and cash equivalents and approximates market values based on quoted market prices (Level 1 inputs). The Company did not transfer any assets measured at fair value on a recurring basis between levels during the three and nine months ended September 30, 2023 and 2022.

Concentration of Credit Risk

Credit risk represents the risk that the Company would incur a loss if counterparties failed to perform pursuant to the terms of their agreements. Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash balances with financial institutions in federally insured accounts and has cash balances in excess of the insurance limits. Cash equivalents consist of investment in United States government money market funds with major financial institutions. These deposits and funds may be redeemed upon demand and the Company does not anticipate any losses on such balances. The Company has not experienced any losses to date and believes that it is not exposed to any significant credit risk on cash and cash equivalents.

Revenue Recognition

The Company applies Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers (Topic 606), to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods and services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with the customer(s); (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. At contract inception, the Company assesses the goods or services promised within each contract that falls under the scope of Topic 606, determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company enters into licensing agreements which are within the scope of Topic 606, under which it licenses certain of its drug candidates’ rights to third parties. The terms of these arrangements typically include payment of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; and royalties on net sales of the licensed product, if and when earned. See Note 9 for additional information regarding the Company’s license agreements.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligation under each of its agreements, the Company performs the five steps under Topic 606 described above. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price,

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which may include forecasted revenues, development timelines, reimbursement of personnel costs, discount rates and probabilities of technical and regulatory success.

Licensing of Intellectual Property: If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period, and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone Payments: At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal will not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in their period of adjustment.

Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue from its license agreements.

Manufacturing and Supply: The obligations under the Company’s agreements may include clinical and/or commercial manufacturing products to be provided by the Company to the counterparty. The services are generally determined to be distinct from the other promises or performance obligations identified in the arrangement. The Company recognizes the transaction price allocated to these services as revenue at a point in time when transfer of control of the related products to the customer occurs.

Accruals for Clinical Trial Expenses

Clinical trial costs primarily consist of expenses incurred under agreements with contract research organizations (CROs), investigative sites, laboratory testing expenses, data management and consultants that conduct the Company's clinical trials. Clinical trial expenses are a significant component of research and development expenses, and the Company outsources a significant portion of these clinical trial activities to third parties. The accrual for site and patient costs includes inputs such as estimates of patient enrollment, patient cycles incurred, clinical site close-out activities, estimated project duration and other pass-through costs. These inputs are required to be estimated due to a lag in receiving the actual clinical information from third parties. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the balance sheets as a prepaid asset or accrued expenses. These third-party agreements are generally cancellable, and related costs are recorded as research and development expenses as incurred. Except for payments made in advance of services, clinical trial costs are expensed as incurred. Non-refundable advance clinical payments for goods or services that will be used or rendered for future research and development activities are recorded as a prepaid asset and recognized as expense as the related goods are delivered or the related services are performed. When evaluating the adequacy of the accrued expenses, management assessments include: (i) an evaluation by the project manager of the work that has been completed during the period; (ii) measurement of progress prepared internally and/or provided by the third-party service provider; (iii) analyses of data that justify the progress; and (iv) the Company’s judgment. Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period. Actual results could differ from the

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estimates made. The Company’s historical clinical accrual estimates have not been materially different from the actual costs.

Stock-Based Compensation

Stock-based payments are accounted for in accordance with the provisions of ASC 718, Compensation—Stock Compensation. The fair value of stock-based payments is estimated, on the date of grant, using the Black-Scholes-Merton model. The resulting fair value is recognized ratably over the requisite service period, which is generally the vesting period of the option. The Company accounts for forfeitures as they occur.

The Company has elected to use the Black-Scholes-Merton option pricing model to value any options granted. The Company will reconsider use of the Black-Scholes-Merton model if additional information becomes available in the future that indicates another model would be more appropriate or if grants issued in future periods have characteristics that prevent their value from being reasonably estimated using this model.

A discussion of management’s methodology for developing some of the assumptions used in the valuation model follows:

Expected Dividend Yield—The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

Expected Volatility—Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company bases the expected volatility on the historical volatility of the Company’s publicly traded common stock.

Risk-Free Interest Rate—This is the U.S. Treasury rate for the week of each option grant during the year, having a term that most closely resembles the expected life of the option.

Expected Term—This is a period of time that the options granted are expected to remain unexercised. Options granted have a maximum term of 10 years. The Company estimates the expected life of the option term to be 6.25 years. The Company uses a simplified method to calculate the average expected term.

Net Loss Per Common Share

Basic net loss per common share is determined by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common stock equivalents outstanding for the period. The treasury stock method is used to determine the dilutive effect of the Company’s stock options and restricted stock units (RSUs).

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average common shares outstanding, as they would be anti-dilutive:

Nine Months Ended September 30, 

2023

    

2022

    

Stock options and RSUs

10,971,874

 

9,471,701

 

Comprehensive Loss

Comprehensive loss comprises net loss and other changes in equity that are excluded from net loss. For the three and nine months ended September 30, 2023 and 2022, the Company’s net loss equaled comprehensive net loss and, accordingly, no additional disclosure is presented.

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Recently Issued Accounting Standards

Accounting Standards Not Yet Adopted

There have been no new accounting pronouncements that have significance, or potential significance, to the Company’s unaudited financial statements as of and for the nine months ended September 30, 2023.

3. Prepaid Expenses and Other Current Assets

The following is a summary of the Company’s prepaid expenses and other current assets:

September 30, 

December 31, 

    

2023

    

2022

 

Prepaid research and development expenses

$

1,810,904

$

2,300,209

Other prepaid expenses

602,593

399,861

Other receivables

 

188,949

 

144,016

Prepaid expenses and other current assets

$

2,602,446

$

2,844,086

4. Property and Equipment

Property and equipment, net consisted of the following:

September 30, 

December 31, 

    

2023

    

2022

 

Furniture and fixtures

$

342,203

$

342,203

Laboratory equipment

 

1,349,370

 

1,343,081

Office equipment

 

18,943

 

17,762

Computer equipment

 

316,466

 

309,826

Leasehold improvements

616,133

616,133

Property and equipment

 

2,643,115

 

2,629,005

Less accumulated depreciation

 

(2,510,136)

 

(2,386,615)

Property and equipment, net

$

132,979

$

242,390

Depreciation expense was $42,747 and $47,347 for the three months ended September 30, 2023 and 2022, respectively, and $130,004 and $161,427 for the nine months ended September 30, 2023 and 2022, respectively.

5. Accrued Expenses

The following is a summary of the Company’s accrued expenses:

    

September 30, 

December 31, 

2023

2022

Accrued research and development expenses

$

2,345,416

$

3,484,742

Accrued bonuses

1,717,901

2,664,613

Accrued consulting and other professional fees

 

550,955

 

499,592

Accrued employee benefits

 

680,648

 

300,653

Other accrued expenses

 

16,457

 

42,406

Accrued expenses

$

5,311,377

$

6,992,006

6. Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the circumstances present. The Company determines a lease exists if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the

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right to obtain substantially all of the economic benefits from the use of an identified asset as well as direct the right to use of that asset. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less on the lease commencement date. If a contract is considered to be a lease, the Company recognizes a lease liability based on the present value of the future lease payments over the expected lease term, with an offsetting entry to recognize a right-of-use asset.

The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a term similar to the term of the lease for which the rate is estimated. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

The Company leases office and research space in Rockville, Maryland under an operating lease that is subject to annual rent increases (the Lease). The Company paid a security deposit of $52,320 to be held until the expiration or termination of the Company’s obligations under the Lease. In April 2023, the Company and its landlord entered into an amendment to the Lease (the Lease Amendment). Pursuant to the Lease Amendment, the Company and the landlord agreed that the lease term for a portion of the premises consisting of approximately 30,000 square feet, would be extended for the period from November 1, 2023 to January 31, 2025. The Company’s lease of the remaining premises, consisting of approximately 12,000 square feet expired on October 31, 2023.

The components of lease expense and related cash flows were as follows:

Three Months Ended September 30, 

Nine Months Ended September 30, 

2023

   

2022

   

2023

   

2022

Operating lease cost

$

255,044

$

231,989

$

734,393

$

695,968

Variable lease cost

155,583

153,753

471,879

458,638

Total operating lease cost

$

410,627

$

385,742

$

1,206,272

$

1,154,606

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflows for operating leases

$

285,122

$

278,168

$

845,332

$

824,714

Maturities of lease liability due under the Company’s lease agreements as of September 30, 2023 were as follows:

Operating Lease

    

Obligation

October 1, 2023 - December 31, 2023

$

226,438

2024

789,183

2025

67,401

Thereafter

Total

1,083,022

Present value adjustment

(71,271)

Present value of lease payments

$

1,011,751

Supplemental information related to leases were as follows:

    

September 30, 

December 31, 

Operating Leases

2023

2022

Weighted-average remaining lease term (in years)

1.29

0.80

Weighted-average incremental borrowing rate

9.9%

8.0%

Nine Months Ended September 30, 

2023

   

2022

Right-of-use assets obtained in exchange for operating lease obligations

$

872,892

$

-

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7. Stockholders’ Equity

At-The-Market Sales Facility

In March 2022, the Company filed a shelf registration statement with the SEC, which was declared effective on April 22, 2022. On April 28, 2022, the Company terminated an at-the-market sales agreement previously entered into with Cowen and Company, LLC (Cowen) in 2020 and entered into a new at-the-market sales agreement (the 2022 Sales Agreement) with Cowen. Under the 2022 Sales Agreement, the Company may sell up to $100.0 million worth of shares of common stock. During the year ended December 31, 2022, the Company issued and sold 1,953,854 shares of common stock under the 2022 Sales Agreement at a weighted average price per share of $2.22, for aggregate net proceeds of $4.2 million, after deducting commissions and offering expenses.

During the quarter ended March 31, 2023, the Company issued and sold 9,822,930 shares of common stock under the 2022 Sales Agreement at a weighted average price per share of $3.01, for aggregate net proceeds of $28.7 million, after deducting commissions and offering expenses. There have been no sales subsequent to March 31, 2023. As of September 30, 2023, approximately $66.0 million remained available to be sold under the terms of the 2022 Sales Agreement.

2013 Equity Incentive Plan

The Company’s board of directors adopted, and its stockholders approved, its 2013 Equity Incentive Plan (the 2013 Plan) effective on January 9, 2014. In April 2022, the Company’s board of directors approved an amendment and restatement of the 2013 Plan, which was approved by the Company’s stockholders at the Company’s annual meeting of stockholders held in May 2022 (as so amended, the Amended 2013 Plan).

The Amended 2013 Plan provides for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code to the Company’s employees and its parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock awards, RSU awards, stock appreciation rights, performance stock awards and other forms of stock compensation to its employees, including officers, consultants and directors. The Amended 2013 Plan also provides for the grant of performance cash awards to the Company’s employees, consultants and directors. Unless otherwise stated in a stock option agreement, 25% of the shares subject to an option grant will typically vest upon the first anniversary of the vesting start date, with the balance of the shares vesting in a series of thirty-six successive equal monthly installments as of the first day of each month measured from the first anniversary of the vesting start date. Upon termination of employment by reasons other than death, cause, or disability, any vested options will terminate 90 days after the termination date, unless otherwise set forth in a stock option agreement. Stock options generally terminate 10 years from the date of grant.

Authorized Shares

The maximum number of shares of common stock that initially could be issued under the 2013 Plan was 1,000,000 shares, plus any shares subject to stock options or similar awards granted under the Company’s prior 2003 Equity Incentive Plan that expired or terminated without having been exercised in full or were forfeited or repurchased by the Company. The number of shares of common stock reserved for issuance under the 2013 Plan automatically increased on January 1 of each year, through January 1, 2022, by 3% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year.

Following the approval of the Amended 2013 Plan by the Company’s stockholders, the share reserve under the Amended 2013 Plan was increased by 2,619,622 shares, and beginning on January 1, 2023 and ending on (and including) January 1, 2029, the maximum number of shares of common stock that may be issued under the Amended 2013 Plan will cumulatively be increased by 4% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the board of directors or the compensation committee thereof. The maximum number of shares that may be issued pursuant to exercise of incentive stock options under the Amended 2013 Plan is 20,000,000 shares. As of September 30, 2023, the total number of shares

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reserved for issuance under the Amended 2013 Plan was 11,681,878 shares, of which 2,592,669 shares were available for future grants.

Shares issued under the Amended 2013 Plan may be authorized but unissued or reacquired shares of common stock. Shares subject to stock awards granted under the Amended 2013 Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, will not reduce the number of shares available for issuance under the Amended 2013 Plan. Additionally, shares issued pursuant to stock awards under the Amended 2013 Plan that the Company repurchases or that are forfeited, as well as shares reacquired by the Company as consideration for the exercise or purchase price of a stock award or to satisfy tax withholding obligations related to a stock award, will become available for future grant under the Amended 2013 Plan.

A summary of the Company’s stock option activity under the Amended 2013 Plan for the nine months ended September 30, 2023 is as follows:

WEIGHTED-

AGGREGATE

 

WEIGHTED-

AVERAGE

INTRINSIC

 

AVERAGE

REMAINING

VALUE

 

OUTSTANDING

EXERCISE

CONTRACTUAL

(IN

 

OPTIONS

    

PRICE

    

TERM (YEARS) 

    

THOUSANDS)

Outstanding as of December 31, 2022

6,774,792

$

6.37

6.1

Options granted

2,451,050

2.55

Options exercised

(100,060)

1.15

Options forfeited

(896,882)

6.16

Outstanding as of September 30, 2023

8,228,900

5.32

6.4

$

655

Vested or expected to vest as of September 30, 2023

8,087,000

5.39

6.4

599

Exercisable as of September 30, 2023

4,849,652

7.43

4.6

307

As of September 30, 2023, there was $4,825,031 of total unrecognized compensation expense related to unvested options under the Amended 2013 Plan that will be recognized over a weighted-average period of approximately 2.7 years. Total intrinsic value of the options exercised during the nine months ended September 30, 2023 was $82,093 and total cash received for options exercised was $115,498. There were no options exercised under the Amended 2013 Plan during the nine months ended September 30, 2022. The total fair value of stock options which vested in the nine months ended September 30, 2023 and 2022 was $1,402,470 and $2,699,940, respectively.

In January 2022, the Company granted stock options to purchase an aggregate of 141,900 shares to certain employees under the 2013 Plan which were subject to performance vesting conditions. The shares will vest upon achievement of milestones as follows: (i) one-half of the shares will vest upon FDA approval of uproleselan for patients with relapsed/refractory acute myeloid leukemia and (ii) one-half of the shares will vest upon the first commercial sale of uproleselan in the United States or abroad. The maximum fair value of $113,520 associated with the performance-based options granted in January 2022 is excluded from the unrecognized compensation expense under the 2013 Plan as the completion of the performance milestones was not probable as of September 30, 2023. The Company will reevaluate at the end of each reporting period the probability that the performance conditions will be achieved and will record any adjustments to the compensation cost at that time.

An RSU is a stock award that entitles the holder to receive shares of the Company’s common stock as the award vests. The fair value of each RSU is based on the closing price of the Company’s common stock on the date of grant. In January 2021, the Company awarded RSUs under the 2013 Plan to all of its employees. The RSUs granted vest over four years in equal installments on each anniversary of the grant date, provided that the employee remains employed by the Company at the applicable vesting date. Compensation expense is recognized on a straight-line basis. As of September 30, 2023, there was $291,489 of total unrecognized compensation expense associated with outstanding RSU grants that will be recognized over a weighted-average period of approximately 1.3 years.

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The following is a summary of RSU activity under the Amended 2013 Plan for the nine months ended September 30, 2023:

 

Weighted-Average

 

Number of Shares

Grant Date

 

Underlying RSUs

    

Fair Value

 

Unvested at December 31, 2022

204,785

$

3.81

Forfeited

(19,573)

 

3.81

Vested

(68,055)

 

3.81

Unvested at September 30, 2023

117,157

 

3.81

Other Awards

In March 2023, the Company’s board of directors amended the Company’s Non-Employee Director Compensation Policy to include an election to receive unrestricted shares of common stock in lieu of quarterly board and committee retainer cash payments. The number of shares is determined on the last day of each fiscal quarter by dividing the dollar amount of the compensation to be paid for such quarter that is subject to the election by the closing price of a share of common stock on the last trading day of the fiscal quarter, rounded up to the nearest whole share. On September 29, 2023, the Company issued 24,001 shares of Common Stock to non-employee directors who elected to receive shares in lieu of cash for their third quarter 2023 compensation, which was the first quarter for which an election could be made. All shares of common stock issued pursuant to such an election are fully vested upon issuance and are issued as “Other Awards” under the Amended 2013 Plan.

Inducement Plan

The Company’s board of directors previously adopted the GlycoMimetics, Inc. Inducement Plan (as amended to date, the Inducement Plan). The Inducement Plan provides for the grant of nonstatutory stock options, restricted stock awards, RSU awards, stock appreciation rights and other forms of stock awards to individuals not previously an employee or director of the Company as an inducement for such individuals to join the Company. Unless otherwise stated in an applicable stock option agreement, one-fourth of the shares subject to an option grant under the Inducement Plan will typically vest upon the first anniversary of the vesting start date, with the balance of the shares vesting in a series of thirty-six successive equal monthly installments as of the first day of each month measured from the first anniversary of the vesting start date, subject to the new employee’s continued service with the Company through the applicable vesting dates. Upon termination of employment by reasons other than death, cause or disability, any vested options will terminate 90 days after the termination date, unless otherwise set forth in a stock option agreement. Stock options generally terminate 10 years from the date of grant. The Inducement Plan was amended by the board of directors on multiple occasions through January 2022 to increase the number of shares reserved for issuance to 3,000,000 shares. As of September 30, 2023, there were 364,091 shares available for future grants under the Inducement Plan.

A summary of the Company’s stock option activity under the Inducement Plan for the nine months ended September 30, 2023 is as follows:

WEIGHTED-

AGGREGATE

 

WEIGHTED-

AVERAGE

INTRINSIC

 

AVERAGE

REMAINING

VALUE

 

OUTSTANDING

EXERCISE

CONTRACTUAL

(IN

 

OPTIONS

    

PRICE

    

TERM (YEARS) 

    

THOUSANDS)

Outstanding as of December 31, 2022

2,333,525

$

1.82

8.7

Options granted

360,000

2.76

Options forfeited

(67,708)

1.38

Outstanding as of September 30, 2023

2,625,817

1.96

8.1

$

262

Vested or expected to vest as of September 30, 2023

2,041,617

1.95

8.2

247

Exercisable as of September 30, 2023

820,225

1.89

7.6

80

As of September 30, 2023, there was $1,666,940 of total unrecognized compensation expense related to unvested options under the Inducement Plan that will be recognized over a weighted-average period of approximately 2.6 years.

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There were no options exercised under the Inducement Plan during the nine months ended September 30, 2023 or 2022. The total fair value of stock options which vested in the nine months ended September 30, 2023 and 2022 was $469,179 and $460,950, respectively.

During 2021 and the nine months ended September 30, 2022, the Company granted stock options to purchase an aggregate of 584,200 shares to certain newly hired employees under the Inducement Plan which options were subject to the same performance vesting conditions described above with respect to the stock options granted in January 2022 under the 2013 Plan. The maximum fair value of $825,353 associated with the performance-based options is excluded from the unrecognized compensation expense under the Inducement Plan as the completion of the performance milestones were not probable as of September 30, 2023. The Company will reevaluate at the end of each reporting period the probability that the performance conditions will be achieved and will record any adjustments to the compensation cost at that time.

The weighted-average fair value of the options granted under all equity incentive plans during the nine months ended September 30, 2023 and 2022 was $1.97 per share and $0.76 per share, respectively, applying the Black-Scholes-Merton option pricing model utilizing the following weighted-average assumptions:

Nine Months Ended September 30,

    

2023

2022

Expected term

 

6.25 years

6.25 years

Expected volatility

 

78.12%

84.66%

Risk-free interest rate

 

3.57%

1.90%

Expected dividend yield

 

0%

0%

Stock-based compensation expense was classified on the statements of operations as follows for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2023

2022

   

2023

2022

    

Research and development expense

$

211,047

$

242,627

$

678,400

$

831,502

General and administrative expense

 

676,790

 

671,352

 

1,937,705

 

2,126,877

Total stock-based compensation expense

$

887,837

$

913,979

$

2,616,105

$

2,958,379

8. Income Taxes

The Company did not record any tax provision or benefit for the nine months ended September 30, 2023 or 2022. The Company has provided a valuation allowance for the full amount of its net deferred tax assets since realization of any future benefit from deductible temporary differences, net operating loss carryforwards and research and development credits is not more-likely-than-not to be realized at September 30, 2023 and December 31, 2022.

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9. License and Collaboration Agreements

Apollomics

In 2020, the Company entered into a collaboration and license agreement (the Agreement) with Apollomics (Hong Kong), Limited (Apollomics) for the development, manufacture and commercialization of products derived from two of the Company’s compounds, GMI-1271 and GMI-1687 (the Products) for therapeutic and prophylactic uses (the Field) in China, Taiwan, Hong Kong and Macau (the Territory). Under the terms of the Agreement, the Company granted Apollomics:

an exclusive license, with the right to sublicense, to develop, manufacture and have manufactured, distribute, market, promote, sell, have sold, offer for sale, import, label, package and otherwise the Products in the Field in the Territory; and
a non-exclusive license to conduct preclinical research with respect to Products in the Field outside of the Territory for the purposes of developing such Products for use in the Territory.

In 2020, the Company and Apollomics also entered into a clinical supply agreement pursuant to which the Company will manufacture and supply the Products at agreed upon prices. Apollomics has the option to begin manufacture of the Products after appropriate material transfer requirements are met. The Company did not recognize any revenue under the clinical supplies agreement during the nine months ended September 30, 2023 and 2022.

The Company evaluated the Agreement under the provisions of ASC 606 and identified two performance obligations under this revenue arrangement: the (i) delivery of functional licenses and (ii) manufacture and supply of the Products. The initial transaction price consists of a $9.0 million non-refundable up-front payment which was allocated to the delivered functional licenses and recognized in full as revenue in 2020 given that the performance obligation was satisfied upon inception. The Agreement contains various forms of variable consideration, including (i) up to $75.0 million in development milestones based on achievement of certain clinical and regulatory events, (ii) up to $105.0 million of sales-based commercial milestones based on achievement of certain annual net sales targets, (iii) sales-based royalties at specified percentages of net sales ranging from the high single digits to 15%, and (iv) manufacture and supply of clinical and commercial Products. The Company has fully constrained the development milestone consideration using the most likely amount method and will recognize that revenue when it is probable that recognition of revenue related to the milestone will not result in a significant reversal in amounts recognized in future periods, and as such have been excluded from the transaction price. In 2020, the Company received a non-refundable $1.0 million development milestone payment upon acceptance by Chinese regulatory authorities of a Phase 3 bridging study design to support registration in China and recognized this $1.0 million payment as revenue at that time. The Company did not recognize any milestone revenue under the Agreement for the nine months ended September 30, 2023 or 2022.

The Company will recognize revenue related to the sales-based commercial and royalty milestones and royalties at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied), as they were determined to relate predominantly to the licenses granted to Apollomics and, therefore, have been excluded from the transaction price. Lastly, the Company has determined that the consideration for the manufacturing and supply is all variable and is fully constrained. Variable consideration allocated to manufacturing and supply will be recognized at a point in time when the Product is delivered and when the title to the Product is transferred to the customer pursuant to the agreement. The Company reassesses the transaction price in each reporting period and upon the occurrence of a change in circumstances or final resolution of any particular event.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions, or the negative of such words or phrases, are intended to identify “forward-looking statements.” We have based these forward-looking statements on our current expectations and projections about future events. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include those below and elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K, particularly in Part I – Item 1A, “Risk Factors,” and our other filings with the Securities and Exchange Commission. Statements made herein are as of the date of the filing of this Form 10-Q with the Securities and Exchange Commission and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim, any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes for the year ended December 31, 2022, which are included in our Annual Report on Form 10-K filed with the SEC on March 29, 2023.

Overview

We are a late-stage clinical development biotechnology company focused on improving the lives of people living with cancer and inflammatory diseases by leveraging the inhibition of carbohydrate interactions that occur on the surface of cells. We are developing a pipeline of proprietary glycomimetics, which are small molecules that mimic the structure of carbohydrates involved in important biological processes, to inhibit disease-related functions of carbohydrates such as the roles they play in inflammation, cancer and infection. We believe this represents an innovative approach to drug discovery to treat a wide range of diseases. We are focusing our efforts on drug candidates for diseases that we believe will qualify for orphan drug designation.

Our proprietary glycomimetics platform is based on our expertise in carbohydrate chemistry and our understanding of the role carbohydrates play in key biological processes. Most human proteins are modified by the addition of complex carbohydrate structures to the surface of such proteins, which affects the functions of the proteins and their interactions with other molecules. Our initial research and development efforts have focused on drug candidates targeting selectins, which are proteins that serve as adhesion molecules and bind to carbohydrates that are involved in the inflammatory component and progression of a wide range of diseases, including hematologic disorders, cancer and cardiovascular disease. For example, we believe that members of the selectin family play a key role in tumor metastasis and resistance to chemotherapy. Inhibiting specific carbohydrates from binding to selectins has long been viewed as a potentially attractive approach for therapeutic intervention. The ability to successfully develop drug-like carbohydrate compounds that inhibit binding with selectins, known as selectin antagonists, has historically been limited by their potency and the complexities of carbohydrate chemistry. We believe our expertise in the rational design of potent glycomimetic antagonists with drug-like properties and in carbohydrate chemistry enables us to identify highly effective selectin antagonists and other glycomimetics that may inhibit the disease-related functions of certain carbohydrates in order to develop novel drug candidates to address orphan diseases with high unmet medical need.

Our lead glycomimetic drug candidate, uproleselan, is a specific E-selectin antagonist that we are developing to be used in combination with chemotherapy to treat patients with acute myeloid leukemia, or AML, a life-threatening hematologic cancer, and potentially other hematologic cancers. In 2021, we completed enrollment of 388 patients in a randomized, double-blind, placebo-controlled Phase 3 pivotal clinical trial to evaluate uproleselan in individuals with relapsed/refractory AML, the design of which was based on guidance received from the U.S. Food and Drug Administration, or FDA.

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In September 2022, we submitted a request to the FDA to amend the protocol for the trial to conduct an interim analysis and have the findings reviewed by the trial’s Independent Data Monitoring Committee, or IDMC, as blinded pooled survival data showed patients living longer than expected based on the historical benchmarks used to design the trial. The statistical plan agreed to with the FDA was for the IDMC to review efficacy and safety data at 80% of survival events, which was reached at the end of 2022. When designing the interim analysis, we amended the protocol to create the opportunity to achieve unblinding at approximately 80% of survival events while maintaining the statistical integrity of the final analysis should the IDMC recommend the trial continue to the final overall events trigger. The interim analysis plan required a high statistical threshold to be met for the IDMC to recommend unblinding, reserving approximately 95% of the trial’s statistical power for the final analysis. In February 2023,the IDMC reviewed the interim utility analysis and recommended that the pivotal Phase 3 clinical trial continue to the originally planned final overall survival events trigger.

In June 2023, the FDA cleared the addition of a protocol amendment to our pivotal Phase 3 trial to allow for a time-based analysis of the primary endpoint of overall survival to be conducted after a defined cutoff date, if the 295 survival events originally planned for an event-driven analysis have not been observed by that date. Following the addition of a time-based analysis, we now expect to report topline results from the trial by the end of the second quarter of 2024. We are continuing our preparation for a potential filing of a new drug application, or NDA, with the FDA.

We have also entered into a Cooperative Research and Development Agreement, or CRADA, with the National Cancer Institute, or NCI, part of the National Institutes of Health, to conduct a Phase 2/3 randomized, controlled clinical trial testing the addition of uproleselan to a standard chemotherapy regimen. Enrollment of 267 patients in the Phase 2 portion was completed in December 2021. There will be a planned interim analysis that will evaluate event-free survival and whether the pre-specified threshold for continuing to Phase 3 has been met. The trial may also provide support for regulatory filings, if the results of the planned interim analysis are sufficiently positive.

In May 2023, the FDA agreed to our initial Pediatric Study Plan, or iPSP. In October 2023, the European Medicines Agency also agreed to our Pediatric Investigational Plan, or PIP. The iPSP and the PIP each include a deferral for study completion, and a waiver for children less than 28 days of age. As part of the pediatric plans, an NCI sponsored Phase 1/2 pediatric trial is currently being conducted by the Children’s Oncology Group Pediatric Early Phase Clinical Trials Network. The Phase 1/2 dose escalation study will evaluate the safety and preliminary activity of uproleselan plus fludarabine and high dose cytarabine in pediatric AML patients after two or more prior therapies. Enrollment in the Phase 1 portion is expected to be up to 18 patients. The first patient was enrolled in October 2023.

Uproleselan is also being studied in multiple investigator-initiated trials. The initial results from two investigator-initiated trials evaluating safety and preliminary efficacy in frontline unfit and treated secondary AML populations not previously studied with uproleselan were selected for poster presentation at the 64th American Society of Hematology Annual Meeting held in December 2022.

In June 2023, the first pediatric patient was treated with uproleselan in an investigator-initiated, single-arm, multi-center Phase 1/2 trial to assess safety and tolerability, as well as determine a recommended phase 2 dose, or RP2D, of uproleselan plus myeloablative, busulfan-based, pre-transplant conditioning for treatment of AML. The Phase 2 trial will further assess the preliminary uproleselan efficacy at the RP2D. The trial will enroll up to 28 patients (Age ≥12 months and ≤ 30 years).

We have rationally designed an innovative antagonist of E-selectin, GMI-1687, that could be a subcutaneously administered treatment. Initially developed as a potential life-cycle extension to uproleselan, we believe that GMI-1687 could be developed to broaden the clinical usefulness of an E-selectin antagonist to conditions where outpatient treatment is preferred or required. In May 2022, we filed an investigational new drug application, or IND, for GMI-1687 as a potential treatment for vaso-occlusive crisis, or VOC, a common complication of sickle cell disease and received the “safe to proceed” letter from the FDA in June 2022. In August 2023, we enrolled the first healthy adult volunteers in a Phase 1a double-blind, single-center, randomized, placebo-controlled, single ascending dose trial of GMI-1687. We expect to enroll approximately 40 subjects in this trial, with eligible subjects receiving a single dose of GMI-1687 or placebo (6:2 ratio) via subcutaneous injection. Safety, tolerability and pharmacokinetics of up to five dose levels (3.3, 10, 20, 40, and 80 mg) will be evaluated. We expect initial results by the end of the first quarter of 2024.

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We are advancing other preclinical-stage programs, including small-molecule glycomimetic compounds that inhibit the protein galectin-3, which we believe may have potential to be an orally administered treatment for fibrosis, cancer and cardiovascular disease. In March 2022, we selected a lead galectin drug candidate, GMI-2093, for evaluation in preclinical studies. We are evaluating options for the further development of GMI-2093 as a potential treatment for fibrosis and in oncology indications.

We have also designed GMI-1359, a drug candidate that simultaneously targets both E-selectin and a chemokine receptor known as CXCR4. In the fourth quarter of 2021, we terminated a Phase 1b trial of GMI-1359 in hormone receptor positive breast cancer patients whose tumors had spread to bone and have deactivated the existing GMI-1359 IND as of August 2022. We are not currently developing GMI-1359, but are seeking a licensing partner to continue clinical development of this drug candidate.

We have financed our operations primarily through private placements of our securities, up-front and milestone payments under our license and collaboration agreements and the net proceeds from public offerings of common stock, including sales of common stock under at-the-market sales facilities with Cowen and Company LLC, or Cowen. We have no approved drugs currently available for sale, and substantially all of our revenue to date has been revenue from up-front and milestone payments under license and collaboration agreements.

Since inception, we have incurred significant operating losses. We had an accumulated deficit of $447.4 million as of September 30, 2023 and we expect to continue to incur significant expenses and operating losses over at least the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year, depending on the timing of our clinical trials and our expenditures on other research and development activities. We anticipate that our expenses will increase as we:

initiate, conduct and complete our ongoing and planned clinical trials of uproleselan and GMI-1687, including fulfilling our funding and supply commitments related to the ongoing clinical trials of uproleselan;
conduct NDA-enabling activities related to manufacture, toxicology and clinical pharmacology for our product candidates;
manufacture additional uproleselan drug supplies for validation and prepare for commercialization;
seek regulatory approvals for uproleselan or any other drug candidates that successfully complete clinical trials;
ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize uproleselan or any other drug candidates for which we may obtain regulatory approval;
maintain, expand and protect our intellectual property portfolio;
maintain sufficient levels of insurance, including product liability and directors, officers and corporate liability insurance policies; and
add personnel to support our drug development and potential future commercialization efforts.

To fund further operations, we will need to raise capital. We may obtain additional financing in the future through the issuance of our common stock, through other equity or debt financings, potentially including the use of our at-the-market sales facility with Cowen, through collaborations or partnerships with other companies or through the sale of potential royalty streams from a drug candidate. We may not be able to raise additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could compromise our ability to execute on our business plan. Although it is difficult to predict future liquidity requirements, we believe that our existing cash and cash equivalents will be sufficient to fund our operations into late fourth quarter of 2024 without giving effect to potential business development opportunities, such as upfront or milestone payments under license and collaboration agreements, or additional financing activities including the potential sale of common stock under our at-the-market sales facility or otherwise. However, our ability to successfully transition to profitability will be dependent upon achieving a level of revenues adequate to support our cost structure. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

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Our Collaboration and License Agreements

Apollomics

In 2020, we entered into an exclusive collaboration and license agreement with Apollomics (Hong Kong) Limited, or Apollomics, for the development and commercialization of uproleselan and GMI-1687 in Mainland China, Hong Kong, Macau and Taiwan, also known as Greater China. Under the terms of the agreement, Apollomics will be responsible for clinical development and commercialization in Greater China. We will also collaborate with Apollomics to advance the preclinical and clinical development of GMI-1687. In 2020, we received an upfront cash payment of $9.0 million and also received a $1.0 million development milestone payment. There were no milestone payments from Apollomics during the nine months ended September 30, 2023 or 2022. Subject to the terms of the agreement, we will be eligible to receive potential further milestone payments totaling approximately $179.0 million, as well as tiered royalties ranging from the high single digits to 15%, as a percentage of net sales. Apollomics will be responsible for all costs related to development, regulatory approvals, and commercialization activities for uproleselan and GMI-1687 in Greater China, and we and Apollomics expect to enter into clinical and commercial supply agreements with respect to our provision of uproleselan and GMI-1687 to Apollomics. We retain all rights for both compounds in the rest of the world.

In 2020, the China National Medical Products Administration, or NMPA, Center for Drug Evaluation, or CDE, granted IND approval for uproleselan (also known as APL-106), enabling the initiation of a Phase 1 pharmacokinetics and tolerability trial and a planned Phase 3 bridging trial of APL-106 in combination with chemotherapy in relapsed/refractory AML. In 2021, APL-106 was granted Breakthrough Therapy Designation from the China NMPA CDE for the treatment of relapsed/refractory AML. In 2021, Apollomics enrolled the first patient in the Phase 1 trial and enrolled the first patient in the Phase 3 portion of the trial later in 2021.

In 2020, we also entered into a clinical supply agreement with Apollomics under which we will manufacture and supply uproleselan product to Apollomics at agreed upon prices. Apollomics has the option to begin manufacture after appropriate material transfer requirements are met. During the year ended December 31, 2021, we recognized $1.1 million in revenue from the sale of clinical supplies to Apollomics under the clinical supply agreement. There were no sales of clinical supplies to Apollomics during the nine months ended September 30, 2023 or 2022.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of revenue and expenses during the reporting periods. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances at the time such estimates are made. Actual results may materially differ from our estimates and judgments under different assumptions or conditions. We periodically review our estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in our financial statements prospectively from the date of the change in estimate.

We define our critical accounting policies as those accounting principles generally accepted in the United States that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. For a description of our critical accounting policies and estimates, please see the disclosures in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022. There have not been any material changes to our critical accounting policies and estimates since December 31, 2022.

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Components of Operating Results

Revenue

To date, we have not generated any revenue from the sale of our drug candidates and do not expect to generate any revenue from the sale of drugs in the near future. Substantially all of our historical revenue consisted of upfront and milestone payments under license and collaboration agreements.

Research and Development

Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full-time research and development employees, facilities expenses, overhead expenses, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, fees paid to CROs and other consultants and other outside expenses. Other preclinical research and platform programs include activities related to exploratory efforts, target validation, lead optimization for our earlier programs and our proprietary glycomimetics platform. Our research and development expenses during the periods presented in this report have related primarily to the development of uproleselan and GMI-1687.

We do not currently utilize a formal time allocation system to capture expenses on a project-by-project basis because we are organized and record expense by functional department and our employees may allocate time to more than one development project. Accordingly, we only allocate a portion of our research and development expenses by functional area and by drug candidate.

Research and development costs are expensed as incurred. Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed.

Research and development activities are central to our business model. Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later stage clinical trials. We expect our research and development expenses to increase over the next several years as we seek to progress uproleselan, GMI-1687 and our other drug candidates into and through clinical development. However, it is difficult to determine with certainty the duration and completion costs of our current or future preclinical studies and clinical trials of our drug candidates, or if, when or to what extent we will generate revenues from the commercialization and sale of any of our drug candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our drug candidates.

The duration, costs and timing of clinical trials and development of our drug candidates will depend on a variety of factors that include:

per patient trial costs;
the number of patients that participate in the trials;
the number of sites included in the trials;
the countries in which the trial is conducted;
the length of time required to enroll eligible patients;
the number of doses that patients receive;
the drop-out or discontinuation rates of patients;
potential additional safety monitoring or other studies requested by regulatory agencies;
the duration of patient follow-up; and
the safety and efficacy profile of the drug candidate.

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In addition, the probability of success for each drug candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each drug candidate, as well as an assessment of each drug candidate’s commercial potential.

General and Administrative

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, accounting, business development and human resources functions. Other significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters and fees for accounting and consulting services. We anticipate that our general and administrative expenses will increase in the future as we undertake potential regulatory filing and commercialization efforts for uproleselan.

Interest Income

Interest income consists of interest income earned on our cash and cash equivalents.

Results of Operations for the Three and Nine Months Ended September 30, 2023 and 2022

The following tables set forth our results of operations for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30, 

Change

(dollars in thousands)

    

2023

    

2022

    

    

Revenue

$

$

$

Costs and expenses:

                        

Research and development expense

5,292

4,923

369

7

%

General and administrative expense

 

4,522

 

3,845

 

677

18

%

Total costs and expenses

 

9,814

 

8,768

 

1,046

12

%

Loss from operations

 

(9,814)

 

(8,768)

 

(1,046)

(12)

%

Interest income

 

611

 

244

 

367

150

%

Net loss and comprehensive loss

$

(9,203)

$

(8,524)

$

(679)

(8)

%

Nine Months Ended September 30, 

Change

(dollars in thousands)

    

2023

    

2022

    

    

Revenue

$

$

75

$

(75)

(100)

%

Costs and expenses:

                        

Research and development expense

 

14,783

 

22,500

 

(7,717)

(34)

%

General and administrative expense

 

14,901

 

14,356

 

545

4

%

Total costs and expenses

 

29,684

 

36,856

 

(7,172)

(19)

%

Loss from operations

 

(29,684)

 

(36,781)

 

7,097

19

%

Interest income

 

1,864

 

336

 

1,528

455

%

Net loss and comprehensive loss

$

(27,820)

$

(36,445)

$

8,625

24

%

Revenue

We did not recognize any revenue during the three and nine months ended September 30, 2023 or in the three months ended September 30, 2022. We recognized $75,000 during the nine months ended September 30, 2022 from our agreements with Apollomics described above.

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Research and Development Expense

The following tables summarize our research and development expense by functional area for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30, 

Change

(dollars in thousands)

    

2023

    

2022

    

Clinical development

$

2,154

$

1,768

$

386

22

%

Manufacturing and formulation

 

462

 

362

 

100

28

%

Contract research services, consulting and other costs

 

340

 

225

 

115

51

%

Laboratory costs

 

405